Latest news with #HLIBResearch
The Star
11 hours ago
- Business
- The Star
Local banks positioning for potential OPR cut
HLIB Research noted that fixed deposit competition appeared benign with no significant board rate hikes observed. PETALING JAYA: Local banks are positioning for a potential overnight policy rate (OPR) cut in the second half of the year by paring back deposit rates and recalibrating fixed deposit (FD) strategies. In April, total deposits grew 3.8% year-on-year (y-o-y) and 0.2% month-on-month (m-o-m), supported by current account savings account (CASA) growth of 4.5% and FD growth of 2.5%. The CASA ratio held relatively stable at 28.5%, slightly lower than 28.6% in March 2025 but up from 28.4% a year ago. Meanwhile, the industry's loan-to-deposit ratio (LDR) eased to 87.4%, from 87.6% in the previous month and 86.3% in April 2024. Hong Leong Investment Bank (HLIB) Research noted that fixed deposit competition appeared benign with no significant board rate hikes observed. However, it flagged some cuts of between five and 15 basis points (bps) in promotional and conventional deposit rates across May. 'This is seen as a proactive step taken by banks to manage net interest margin (NIM) in view of the potential OPR cut, and possibly as a sign of easing competition,' it noted in a report yesterday. Similarly, Kenanga Research highlighted that most banks anticipate one OPR cut in 2H25, prompting 'more concerted efforts to drive shorter-term fixed deposit products.' It pointed out that fixed deposits with a tenure of fewer than six months made up 52% of total deposits in April 2025, compared with 51% in March 2025, while deposits with tenures of more than one year declined from 3% to 2%. 'This may likely persist as banks seek to further rationalise their funding cost amid the decline in asset yields,' it said. 'However, as the recent reduction in statutory reserve requirement (SRR) looks to provide some relief to funding cost (up to two bps improvement to NIMs), we believe banks can afford to not overly raise deposit rates to accumulate capital in the near term.' Last month, Bank Negara kept the OPR at 3% but lowered the SRR ratio by 100 bps to 1%, effective May 16 – the first SRR reduction since March 2020, at the start of the Covid-19 pandemic. CGS International (CGSI) Research pointed out that over the first four months of 2025, deposits increased by RM30.8bil, outpacing loan growth of RM23.2bil, 'reflecting improvements in the liquidity of the banking industry, in our view.' 'We believe the cut in the SRR by Bank Negara would release about RM19bil into the banking system, and would further enhance banks' liquidity,' the research house added. Meanwhile, in April 2025, total loans grew by 5.1% y-o-y and 1.0% year-to-date, a marginal slowdown from 5.2% y-o-y in March. The moderation was mainly attibuted to the slightly softer business loan growth, which eased to 4.6% y-o-y versus 4.8% in March. On the other hand, household loans held firm at 6% y-o-y for a second straight month. The industry's gross impaired loans ratio inched up to 1.43% in April from 1.42% in March, but improved from 1.63% a year ago, while loan loss coverage held relatively steady at 91%. CGSI Research viewed the slowdown in loan growth as 'not overly concerning,' noting that the expansion remains within its 2025 loan growth forecast of between 4.5% and 5.5%.
The Star
20 hours ago
- Business
- The Star
IOI to benefit from fresh fruit bunch output recovery
HLIB Research said IOI's FFB output has shown month-on-month and year-on-year recovery since March. PETALING JAYA: IOI Corp Bhd expects its continuing fresh fruit bunch (FFB) output recovery will help it beat its own growth guidance of 1% to 2% in the financial year 2025 (FY25). Given the anticipated strong FFB output in the fourth quarter (4Q25), IOI is confident of keeping its crude palm oil (CPO) production cost at RM2,100 per tonne for the full year, said Hong Leong Investment Bank (HLIB) Research. HLIB Research maintained its own FY25 FFB output growth assumption of 2.5%. It said IOI's FFB output has shown month-on-month and year-on-year (y-o-y) recovery since March with weather conditions improving. The output recovery has helped to narrow the group's year-to-date FFB output decline to just 0.3%, for the first 10 months of FY25. Lower FFB output, minimum wage hike effective February and higher windfall profit levy had lifted IOI's 3Q25 CPO production cost by 1.3% y-o-y to RM2,530 per tonne, bringing its nine-month FY25 CPO production cost to RM2,104 per tonne. It said the accelerated replanting programme of 8,000ha to 9,000ha per annum, embarked since FY19, would continue into FY26. This will bring down its average age profile to about 13 years by end-FY26.
New Straits Times
2 days ago
- Business
- New Straits Times
IOI Corp's FFB growth target maintained at 2.5pct for FY2025
KUALA LUMPUR: IOI Corporation Bhd is maintaining its fresh fruit bunch (FFB) output growth target at 2.5 per cent for the financial year 2025 (FY25), said Hong Leong Investment Bank Bhd (HLIB Research). According to the bank, FFB production has rebounded both month-on-month and year-on-year since March 2025, supported by favourable weather conditions. "The output recovery has helped to narrow the group's year-to-date (YTD) FFB output decline to just 0.3 per cent for the first ten months of FY25. "Management indicated that the recovery trend is likely to continue in the coming months, potentially allowing IOI Corp to exceed its initial FY25 FFB output growth guidance of one to two per cent. "As such, we maintain our FY25 FFB output growth assumption of 2.5 per cent," it said in a note. Meanwhile, HLIB Research noted that several factors, including lower FFB output, the minimum wage hike effective February 2025, and a higher windfall profit levy, contributed to a 1.3 per cent YoY increase in IOI Corp's crude palm oil (CPO) production cost for the third quarter of FY25 (3Q25), raising it to RM2,530 per metric tonne. This brought the average CPO production cost for the first nine months of FY25 to RM2,104 per metric tonne, representing a 1.5 per cent decline compared to the same period last year. Given the anticipated strong FFB output in 4Q25, the firm said management remains confident in keeping the full-year CPO production cost below RM2,100 per metric tonne. Furthermore, HLIB Research said IOI Corp's decent performance in the manufacturing segment is expected to be sustained into 4Q25, if not improved further. It added that earnings at the manufacturing segment improved QoQ in 3Q25, with a profit of RM81.4 million, primarily driven by margin expansion at the refinery sub-segment, which more than mitigated weakness at the oleochemical and speciality fats sub-segments. "Management shared that earnings at the manufacturing segment should at least track 3Q25's performance (if not better), supported by sustained performance at the refining sub-segment arising from stable margins and improving availability of feedstock. "This includes gradual demand recovery for oleochemical products, albeit input prices remained elevated, as well as an improving contribution from the speciality fats sub-segment (as production normalised from the loss of production)," it said. On that note, HLIB Research also highlighted that IOI Corp's accelerated replanting programme, covering 8,000 to 9,000 hectares per annum since FY19, will continue into FY26. This is expected to reduce the group's average age profile to approximately 13 years by the end of FY26. The firm also noted that construction of the zero-waste paper pulp plant, undertaken through Nextgreen IOI Pulp Sdn Bhd (NIP), a 45 per cent owned joint venture unit of IOI Corp, is scheduled to begin in the first half of 2026 (1H26), with completion targeted by the end of 2027. Upon completion, it said the facility will have an initial annual production capacity of 150,000 metric tonnes of chemical bleached pulp.
The Star
3 days ago
- Automotive
- The Star
Tan Chong forecast to stay in low gear for now
PETALING JAYA: With the challenges it is facing expected to persist, Tan Chong Motor Holdings Bhd has been downgraded to a 'sell' rating by Maybank Investment Bank Research (Maybank IB Research). The research house expects the automotive group to record losses for this financial year (FY25) despite its return to the black with a RM4.14mil net profit in the first quarter of financial year ended March 31 (1Q25). Revenue for 1Q25 declined slightly by 2% year-on-year to RM553mil, mainly due to continued weakness in the sales of Nissan vehicles, which fell by one-fifth to 1,811 units from a year ago. On a positive note, operations in other regions like Vietnam, Cambodia, Laos and Myanmar posted growth, which partially offset the domestic sales decline. However, Maybank IB Research expects challenges in the group's automotive segment to persist, underpinned by weak product appeal and intensifying competition. 'While, we maintain the stock's 38 sen target price based on 0.1 time FY25 book value, we have downgraded our call to 'sell', as we believe downside risks have increased following the recent rally in the share price.' Meanwhile, MIDF Research said Tan Chong's efforts to expand its product portfolio may not translate to meaningful volume contributions from the newer marques in the near term as building brand awareness will likely take time. Thus, it expects the group to stay loss-making. MIDF has a 'sell' rating and 34 sen target price on the stock. Hong Leong Investment Bank Research (HLIB Research) expects some improvement in coming quarters, driven by the recent appreciation of the ringgit. Still it is cautious about the group's outlook because of stiff market competition despite the new launches planned. According to HLIB Research, the launch of new Kicks sport utility vehicle last December is expected to improve group sales in Malaysia. Tan Chong has also started exporting the Serena multi-purpose vehicle to Thailand and recently signed a collaboration agreement with SAIC GM Wuling Automobile to locally assemble the Tan Chong-branded TQ Wuling Bingo electric vehicle (EV), an affordable entry-level compact EV targeting value-driven and urban commuters. 'Management also expects improvements in the Vietnam market, following increasing the introduction of new GAC models into the market. 'Nevertheless, we remain cautious about the group's domestic market outlook, due to the ongoing stiff competition in various segments, as both national marques and non-national original equipment manufacturers introduce new attractive models. 'Recent ringgit appreciation is expected to improve the cost structure of its Malaysia operations' said HLIB Research. The research house has a 'hold' rating on the stock, with a higher target price of 42 sen from 35 sen.
The Star
3 days ago
- Business
- The Star
IJM continues to target more job wins for FY26
PETALING JAYA: IJM Corp Bhd is aiming for a higher project replenishment target for its financial year 2026 (FY26) despite missing its target again in its FY25 ended March 31, analysts say. UOB Kay Hian Research (UOBKH Research) said that the construction and property group guided for a higher replenishment range of between RM6bil and 7bil in FY26 after the release of its FY25 results, which beat expectations. A decent chunk of the replenishments will be from the delayed New Pantai Expressway (NPE) extension worth RM1.4bil and government housing project in Nusantara, Indonesia, estimated at RM1bil. Other key replenishment opportunities include the Penang LRT, the Penang Airport and road projects in Sabah and Sarawak. For FY25, IJM reported a core net profit of RM526.9mil, up 55.5% year-on-year following recognition of major construction milestones that saw its construction-segment earnings picking up significantly during 4Q25. Otherwise, UOBHK Research said that property sales had softened due to delayed launches, while infrastructure earnings declined due to lower throughput for tolls and ports. The construction segment's order book came in at RM11.1bil, comprising RM6.6bil from local jobs and RM4.5bil from foreign jobs in Singapore and Britain. Total job replenishments for the division stood at RM2.7bil. Meanwhile, Hong Leong Investment Bank Research (HLIB Research) said the recent approval for the long-awaited RM1.4bil NPE extension project will lift the group's order book. 'With this win, IJM has hit 40% of our FY26 contract-win assumption and we anticipate more wins this year mainly from data centres and the Nusantara project in Indonesia. 'On the balance-sheet front, IJM's low net gearing of 0.28 times provides ample space to fund the projects,' HLIB Research said. According to the research house, the NPE extension project will be fully funded by the company with no financial commitment from the government. The 15km extension will be fully elevated, linking three major highways – IJM's existing NPE and Besraya highways – with the upcoming LIKE Expressway. Construction will begin in the third quarter of this year with completion slated in 2029. Once operational, the NPE extension is poised to add to IJM's recurring income stream, said HLIB Research. As for the group's property division, UOBKH Research said total property sales came in at RM1.5bil in FY25 as delayed launches back in 3Q25 resulted in sales coming in at the lower end of IJM's target. Unbilled sales stood at RM1.54bil and going forward, IJM is targeting RM2bil in sales in FY26 in line with its previous guidance prior to the delays. As for the group's British ventures, contributions from its newly acquired JRL Group Holdings Ltd could begin as early as FY26. 'The current construction churn rate for the JRL Group is around £400mil with net margins of between 2% and 3%. 'While JRL is currently loss-making, this is largely due to balance-sheet issues causing project delays, which should be solved via a capital injection,' UOBKH Research said. The research house has a 'buy' rating on the stock with a higher target price of RM3.15 from RM3 before.
